Document And Entity Information
Document And Entity Information - shares | 9 Months Ended | |
Sep. 30, 2015 | Nov. 12, 2015 | |
Document Information [Line Items] | ||
Document Type | 10-Q | |
Amendment Flag | false | |
Document Period End Date | Sep. 30, 2015 | |
Document Fiscal Year Focus | 2,015 | |
Document Fiscal Period Focus | Q3 | |
Entity Registrant Name | Xtant Medical Holdings, Inc. | |
Entity Central Index Key | 1,453,593 | |
Current Fiscal Year End Date | --12-31 | |
Entity Filer Category | Smaller Reporting Company | |
Trading Symbol | XTNT | |
Entity Common Stock, Shares Outstanding | 11,886,101 |
CONDENSED CONSOLIDATED BALANCE
CONDENSED CONSOLIDATED BALANCE SHEETS - USD ($) | Sep. 30, 2015 | Dec. 31, 2014 |
Current Assets: | ||
Cash and cash equivalents | $ 7,970,433 | $ 4,468,208 |
Trade accounts receivable, net of allowance for doubtful accounts of $2,416,984 and $1,392,989, respectively | 13,318,450 | 4,427,081 |
Inventories, net | 22,042,508 | 9,558,648 |
Prepaid and other current assets | 1,039,562 | 654,140 |
Total current assets | 44,370,953 | 19,108,077 |
Non-current inventories | 1,681,138 | 1,934,258 |
Goodwill | 23,997,218 | 0 |
Property and equipment, net | 11,433,064 | 4,654,527 |
Intangible assets, net | 42,223,856 | 655,490 |
Other assets | 2,520,464 | 1,598,539 |
Total Assets | 126,226,693 | 27,950,891 |
Current Liabilities: | ||
Accounts payable | 7,485,220 | 3,876,760 |
Accounts payable - related party | 1,035,449 | 250,629 |
Accrued liabilities | 6,716,897 | 1,921,301 |
Warrant derivative liability | 1,399,294 | 1,320,371 |
Current portion of capital lease obligations | 47,246 | 61,970 |
Current portion of royalty liability | 0 | 1,000,750 |
Current portion of long-term debt | 53,172 | 50,671 |
Total current liabilities | 16,737,278 | 8,482,452 |
Long-term Liabilities: | ||
Capital lease obligation, less current portion | 18,962 | 11,808 |
Long-term royalty liability, less current portion | 0 | 6,361,216 |
Long-term convertible debt | 68,000,000 | 0 |
Long-term debt, less current portion | 44,301,474 | 20,870,330 |
Total Liabilities | $ 129,057,714 | $ 35,725,806 |
Commitments and Contingencies | ||
Stockholders' (Deficit) Equity | ||
Preferred stock, $0.000001 par value; 5,000,000 shares authorized; no shares issued and outstanding | $ 0 | $ 0 |
Common stock, $0.000001 par value; 95,000,000 shares authorized; 11,886,107 shares issued and outstanding as of September 30, 2015 and 6,679,646 shares issued and outstanding as of December 31, 2014 | 11 | 7 |
Additional paid-in capital | 81,798,160 | 63,091,620 |
Accumulated deficit | (84,629,192) | (70,866,542) |
Total Stockholders’ Deficit | (2,831,021) | (7,774,915) |
Total Liabilities & Stockholders’ Deficit | $ 126,226,693 | $ 27,950,891 |
CONDENSED CONSOLIDATED BALANCE3
CONDENSED CONSOLIDATED BALANCE SHEETS [Parenthetical] - USD ($) | Sep. 30, 2015 | Dec. 31, 2014 |
Trade accounts receivable, allowance for doubtful accounts (in dollars) | $ 2,416,984 | $ 1,392,989 |
Preferred stock, par value (in dollars per share) | $ 0.000001 | $ 0.000001 |
Preferred stock, shares authorized | 5,000,000 | 5,000,000 |
Preferred stock, shares issued | 0 | 0 |
Preferred stock, shares outstanding | 0 | 0 |
Common stock, par value (in dollars per share) | $ 0.000001 | $ 0.000001 |
Common stock, shares authorized | 95,000,000 | 95,000,000 |
Common stock, shares issued | 11,886,107 | 6,679,646 |
Common Stock, shares outstanding | 11,886,107 | 6,679,646 |
CONDENSED CONSOLIDATED STATEMEN
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS - USD ($) | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2015 | Sep. 30, 2014 | Sep. 30, 2015 | Sep. 30, 2014 | |
Revenue | ||||
Orthopedic product sales | $ 17,421,397 | $ 8,246,325 | $ 36,431,354 | $ 25,712,586 |
Other revenue | 271,623 | 207,179 | 657,395 | 537,821 |
Total Revenue | 17,693,020 | 8,453,504 | 37,088,749 | 26,250,407 |
Cost of Sales | 6,035,673 | 3,017,734 | 12,883,439 | 9,718,952 |
Gross Profit | 11,657,347 | 5,435,770 | 24,205,310 | 16,531,455 |
Operating Expenses | ||||
General and administrative | 3,980,805 | 2,282,386 | 8,805,104 | 6,664,982 |
Sales and marketing | 8,430,303 | 3,927,028 | 18,179,552 | 12,387,459 |
Research and development | 794,464 | 378,252 | 1,519,196 | 955,111 |
Depreciation and amortization | 1,541,220 | 58,763 | 1,765,994 | 216,343 |
Acquisition and integration related expenses (See Note 2, “Business Combination” below) | 3,856,519 | 0 | 3,856,519 | 0 |
Extinguishment of debt | (2,345,019) | 0 | (2,345,019) | 0 |
Impairment of assets | 233,748 | 0 | 233,748 | 0 |
Non-cash consulting expense | 50,000 | 39,697 | 190,869 | 81,924 |
Total Operating Expenses | 16,542,040 | 6,686,126 | 32,205,963 | 20,305,819 |
Loss from Operations | (4,884,693) | (1,250,356) | (8,000,653) | (3,774,364) |
Other Income (Expense) | ||||
Interest expense | (2,111,721) | (1,498,508) | (4,930,941) | (4,216,109) |
Change in warrant derivative liability | 397,366 | 1,653,425 | (78,923) | 1,038,190 |
Non-cash consideration associated stock agreement | 0 | 0 | (558,185) | 0 |
Other income (expense) | (89,926) | (70,344) | (193,052) | (253,289) |
Total Other Income (Expense) | (1,804,281) | 84,573 | (5,761,101) | (3,431,208) |
Net Loss from Operations | $ (6,688,974) | $ (1,165,783) | $ (13,761,754) | $ (7,205,572) |
Net loss per share: | ||||
Basic | $ (0.64) | $ (0.19) | $ (1.70) | $ (1.26) |
Dilutive | $ (0.64) | $ (0.19) | $ (1.70) | $ (1.26) |
Shares used in the computation: | ||||
Basic | 10,432,622 | 6,233,751 | 8,100,226 | 5,711,452 |
Dilutive | 10,432,622 | 6,233,751 | 8,100,226 | 5,711,452 |
CONDENSED CONSOLIDATED STATEME5
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS - USD ($) | 9 Months Ended | |
Sep. 30, 2015 | Sep. 30, 2014 | |
Operating activities: | ||
Net loss | $ (13,761,754) | $ (7,205,572) |
Adjustments to reconcile net loss to net cash used in operating activities: | ||
Depreciation and amortization | 2,403,934 | 498,343 |
Non-cash interest | 1,665,172 | 387,294 |
Extinguishment of debt | (2,345,019) | 0 |
Non-cash consideration associated with stock purchase agreement | 558,185 | 0 |
Loss on sale of fixed assets | 11,377 | 33,373 |
Impairment of Assets | 233,748 | 0 |
Amortization of debt discount | 707,281 | 1,207,859 |
Non-cash consulting expense/stock option expense | 881,681 | 938,785 |
Provision for losses on accounts receivable and inventory | 805,684 | 601,190 |
Change in derivative warrant liability | 78,923 | (1,038,190) |
Changes in operating assets and liabilities: | ||
Accounts receivable | (2,801,124) | 346,151 |
Inventories | 477,818 | (350,198) |
Prepaid and other assets | (325,976) | 22,109 |
Accounts payable | 694,326 | 884,436 |
Accrued liabilities | 1,688,664 | (1,495,107) |
Net cash used in operating activities | (9,027,080) | (5,169,527) |
Investing activities: | ||
Acquisition of X-spine Systems, Inc. | (73,033,049) | 0 |
Purchases of property and equipment and intangible assets | (444,312) | (190,601) |
Proceeds from sale of fixed assets | 102,587 | 10,149 |
Net cash used in investing activities | (73,374,774) | (180,452) |
Financing activities: | ||
Net proceeds from the issuance of convertible debt | 66,322,366 | 0 |
Payment on royalty obligation | (542,905) | 0 |
Net proceeds from equity private placement | 515,395 | 0 |
Payments on capital leases | (78,490) | 0 |
Net proceeds from issuance of long term debt | 17,479,159 | 4,000,000 |
Payments on long-term debt | (38,668) | (492,695) |
Proceeds from the issuance of capital leases | 70,921 | (126,686) |
Net proceeds from the issuance of stock | 2,118,483 | 5,876,299 |
Net cash provided by financing activities | 85,846,261 | 9,256,918 |
Net change in cash and cash equivalents | 3,444,407 | 3,906,939 |
Cash and cash equivalents at beginning of period | 4,468,208 | 3,046,340 |
Cash and cash equivalents at end of period | $ 7,970,433 | $ 6,953,279 |
Business Description and Summar
Business Description and Summary of Significant Accounting Policies | 9 Months Ended |
Sep. 30, 2015 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Business Description and Summary of Significant Accounting Policies | Business Description The accompanying consolidated financial statements include the accounts of Xtant Medical Holdings, Inc. (“Xtant”), formerly known as Bacterin International Holdings, Inc., a Delaware corporation, and its wholly owned subsidiaries, Bacterin International, Inc., (“Bacterin”) a Nevada corporation and X-Spine Systems, Inc. (“X-spine”), an Ohio corporation, (Xtant, Bacterin and X-spine are jointly referred to herein as the “Company”). All intercompany balances and transactions have been eliminated in consolidation. Xtant develops, manufactures and markets regenerative orthopedic products for domestic and international markets. Xtant products serve the combined specialized needs of orthopedic and neurological surgeons, including orthobiologics for the promotion of bone healing, implants and instrumentation for the treatment of spinal disease, tissue grafts for the treatment of orthopedic disorders to promote healing following spine, cranial and foot surgeries The Company also previously developed and licensed coatings for various medical device applications. As of December 31, 2014, the Company made a strategic decision to discontinue the medical device coatings business which resulted in an impairment of related assets. (See Note 5, “Impairment of Assets” below). An operating segment is a component of an enterprise whose operating results are regularly reviewed by the enterprise’s chief operating decision maker to make decisions about resources to be allocated to the segment and assess its performance. The primary performance measure used by management is net income or loss. Up until December 31, 2014, the Company operated two distinct lines of business consisting of the biologics and the device divisions; however, due to immaterial revenue from the device division, the Company has reported as one segment. On July 31, 2015, Xtant acquired all of the outstanding capital stock of X-spine Systems, Inc. for approximately $ 60 13 4.24 The markets in which the Company competes are highly competitive and rapidly changing. Significant technological advances, changes in customer requirements, or the emergence of competitive products with new capabilities or technologies could adversely affect the Company's operating results. The Company's business could be harmed by a decline in demand for, or in the prices of, its products or as a result of, among other factors, any change in pricing or distribution methods, increased price competition, changes in government regulations or a failure by the Company to keep up with technological change. Further, a decline in available donors could have an adverse impact on our business. The accompanying interim condensed consolidated financial statements of the Company for the nine months ended September 30, 2015 and 2014 are unaudited and are prepared in accordance with accounting principles generally accepted in the United States of America. They do not include all disclosures required by generally accepted accounting principles for annual financial statements, but in the opinion of management, include all adjustments, consisting only of normal recurring items, necessary for a fair presentation. Interim results are not necessarily indicative of results which may be achieved in the future for the full year ending December 31, 2015. These financial statements should be read in conjunction with the financial statements and notes thereto which are included in our Annual Report on Form 10-K for the year ended December 31, 2014. The accounting policies set forth in those annual financial statements are the same as the accounting policies utilized in the preparation of these financial statements, except as modified for appropriate interim financial statement presentation. Following the closing of the acquisition, on July 31, 2015, Bacterin International Holdings, Inc. changed its name to Xtant Medical Holdings, Inc. On August 6, 2015 Xtant formed a new wholly owned subsidiary, Xtant Medical, Inc., a Delaware corporation. The creation of the subsidiary will facilitate the integration of Bacterin and X-spine. Xtant completed a 1:10 reverse split In August 2014, Xtant offered 1,143,000 5.70 571,500 7.12 6.5 5.9 We entered into a Common Stock Purchase Agreement on March 16, 2015, as amended and restated on April 17, 2015 (the “Purchase Agreement”), with Aspire Capital Fund, LLC (“Aspire Capital”), which provides that, upon the terms and subject to the conditions and limitations set forth therein, Aspire Capital is committed to purchase up to an aggregate of $ 10.0 207,182 750,000 154,189 3.62 558,185 417,000 1,387,439 During the third quarter of 2015, we issued 140,053 515,395 The Company’s accounts receivable are due from a variety of health care organizations and distributors throughout the world. Approximately 95 98 for more than 10% For the three months ended September 30, 2015, approximately 13% of total cost of goods sold was with one vendor, Norwood Medical (See note 15, “Related Party Transactions”). Revenue by geographical region is as follows: Nine Months Ended September 30, 2015 2014 United States $ 35,419,434 $ 25,792,878 Rest of World 1,669,315 457,529 $ 37,088,749 $ 26,250,407 The preparation of the financial statements requires management of the Company to make a number of estimates and assumptions relating to the reported amount of assets and liabilities and the disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenue and expenses during the period. Significant estimates include the carrying amount of property and equipment, goodwill, and intangible assets; valuation allowances for trade receivables, inventory valuation, and deferred income tax assets; valuation of the warrant derivative liability; inventory reserve; royalty liability; and estimates for the fair value of stock options grants and other equity awards upon which the Company determines stock-based compensation expense. Actual results could differ from those estimates. Long-lived assets, including intangible assets, are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. Recoverability of assets to be held and used is measured by a comparison of the carrying amount of an asset to future net cash flows expected to be generated by the asset. If such assets are considered to be impaired, the impairment to be recognized is measured by the amount by which the carrying amount of the assets exceeds the estimated fair value of the assets. See Note 5, “Impairment of Assets”. Goodwill represents the excess of costs over fair value of assets of businesses acquired. Goodwill and intangible assets acquired in a purchase business combination and determined to have indefinite useful lives are not amortized, instead are tested for impairment at least annually and whenever events or circumstances indicate the carrying amount of the asset may not be recoverable. In its evaluation of goodwill, the Company performs an assessment of qualitative factors to determine if it is more-likely-than-not that goodwill might be impaired and whether it is necessary to perform the two-step goodwill impairment. The Company conducts its annual impairment test on December 31 of each year. Revenue is recognized when all of the following criteria are met: a) the Company has entered into a legally binding agreement with the customer; b) the products or services have been delivered; c) the Company's fee for providing the products and services is fixed or determinable; and d) collection of the Company’s fee is probable. The Company’s policy is to record revenue net of any applicable sales, use, or excise taxes. If an arrangement includes a right of acceptance or a right to cancel, revenue is recognized when acceptance is received or the right to cancel has expired. The Company ships to certain customers under consignment arrangements whereby the Company’s product is stored by the customer. The customer is required to report the use to the Company and upon such notice, the Company invoices the customer and revenue is recognized when above criteria have been met. % The Company expenses advertising costs as incurred. The Company had advertising expense of $ 93,854 29,027 Research and development costs, which are principally related to internal costs for the development of new regenerative orthopedic products technologies and processes are expensed as incurred. Basic net income (loss) per share is computed by dividing net income (loss) by the weighted average number of common shares outstanding. Shares issued during the period and shares reacquired during the period are weighted for the portion of the period that they were outstanding. Diluted net income (loss) per share is computed in a manner consistent with that of basic earnings per share while giving effect to all potentially dilutive common shares outstanding during the period, which include the assumed exercise of stock options and warrants using the treasury stock method. Diluted net loss per share was the same as basic net loss per share for the three and nine months ended September 30, 2015 and 2014, as shares issuable upon the exercise of stock options and warrants were anti-dilutive as a result of the net losses incurred for those periods. Dilutive earnings per share are not reported as their effects of including 1,896,253 1,877,948 The carrying values of financial instruments, including trade accounts receivable, accounts payable, other accrued expenses and long-term debt, approximate their fair values based on terms and related interest rates. The Company follows a framework for measuring fair value. The framework provides a fair value hierarchy that prioritizes the inputs to valuation techniques used to measure fair value. The hierarchy gives the highest priority to unadjusted quoted prices in active markets for identical assets or liabilities (Level 1) and the lowest priority to unobservable inputs (Level 3). The three levels of the fair value hierarchy are described below: Level 1: Inputs to the valuation methodology are unadjusted quoted prices for identical assets or liabilities in active markets. Level 2: Inputs to the valuation methodology include quoted prices for similar assets and liabilities in active markets, and inputs that are observable for the asset or liability, either directly or indirectly, for substantially the full term of the financial instrument. Level 3: Inputs to the valuation methodology are unobservable and significant to the fair value measurement. A financial instrument's level within the fair value hierarchy is based on the lowest level of any input that is significant to the fair value measurement. During the three and nine months ended September 30, 2015 and 2014, there was no reclassification in financial assets or liabilities between Level 1, 2 or 3 categories. The following table sets forth by level, within the fair value hierarchy, our liabilities as of September 30, 2015 and December 31, 2014 that are measured at fair value on a recurring basis: As of As of September 30, December 31, 2015 2014 Level 1 - - Level 2 - - Level 3 $ 1,399,294 $ 1,320,371 The valuation technique used to measure fair value of the warrant liability is based on a valuation model and significant assumptions and inputs determined by us (See Note 11, “Warrants” below). Level 3 Changes Warrant derivative liability Balance at January 1, 2015 $ 1,320,371 Loss recognized in earnings in first half of 2015 476,289 Balance at June 30, 2015 1,796,660 Gain recognized in earnings in third quarter of 2015 (397,366) Balance at September 30, 2015 $ 1,399,294 During the first nine months ended September 30, 2015, the Company did not change any of the valuation techniques used to measure its liabilities at fair value. In November 2014, FASB issued ASU No. 2014-08, Presentation of Financial Statements (Topic 201) and Property, Plant and Equipment (Topic 360) - Reporting Discontinued Operations and Disclosures of Disposals of Components of an Entity. The amendments in this Update are effective for the annual period ending after December 15, 2014, and interim periods within those years. Early adoption is permitted only for disposals (or classifications as held for sale) that have not been reported in financial statements previously issued or available for issuance. ASU 2014-08 is not expected to have a material impact on our consolidated financial position, results of operations, or cash flows. In April 2015, the FASB issued ASU 2015-3, to simplify the presentation of debt issuance costs. This update requires that debt issuance costs be presented in the balance sheet as a direct deduction from the carrying amount of the associated debt liability, consistent with the required presentation for debt discounts. This update is effective for interim and annual periods beginning after December 15, 2015. ASU 2015-3 is not expected to have a material impact. |
Business Combination
Business Combination | 9 Months Ended |
Sep. 30, 2015 | |
Business Combinations [Abstract] | |
Business Combination | (2) Business Combination On July 31, 2015 (the “Acquisition Date”), the Company completed its acquisition of 100% of the outstanding common stock of X-spine, pursuant to a Stock Purchase Agreement (the “Purchase Agreement”). X-spine was engaged in the development, manufacturing and sale of medical devices for use in orthopedic spinal surgeries. The primary reasons for the X-spine acquisition are to combine the Company’s product lines into regenerative orthopedic product lines, leverage customer call points, expand sales and marketing coverage, increase revenue, and drive operating efficiencies. Under the terms of the Purchase Agreement, the Company paid the former X-spine stockholders consideration of approximately $ 60 4.24 13 The cash consideration was financed in part using the net proceeds from the Company’s offering of $ 68 6 The Company accounted for the acquisition as a business combination and recorded the assets acquired, liabilities assumed, and the estimated future consideration obligations at their respective fair values as of the Acquisition Date. The assets acquired and liabilities assumed were recorded as of the Acquisition Date at their respective fair values and consolidated with those of the Company. The reported condensed consolidated balance sheet of the Company after completion of the acquisition reflects these fair values; however, the Company may have to reflect any change from an impact after combined operations are experienced. The results of X-spine operations from the Acquisition Date contributed $ 91,000 components of the aggregate preliminary purchase price for the acquisition were as follows (in thousands): Cash $ 73,033,018 Fair value of Xtant shares 14,934,146 Total purchase price $ 87,967,164 Net Assets Acquired The transaction has been accounted for using the acquisition method of accounting, which requires that assets acquired and liabilities assumed be recognized at their fair values as of the Acquisition Date. Amortization Allocation of period (in purchase price years) Accounts receivable $ 5,989,904 Inventories 13,132,697 Prepaids and other current assets 208,116 Property and equipment, net 7,409,667 Cash 57,818 Total tangible assets acquired 26,798,202 Less: liabilities assumed 6,021,756 Net tangible assets less liabilities $ 20,776,446 Intangible assets: Technology 28,698,700 10 Customer relationships 9,911,000 14 Tradename 4,543,300 10 Non-compete agreements 40,500 3 Goodwill 23,997,218 Total purchase price $ 87,967,164 The assets acquired and liabilities assumed were recorded at their estimated fair values as of the Acquisition Date. We determined the fair value of the inventory based on its estimated selling price less cost to sell and normal profit margin. The fair value of the technology and tradename intangible assets were determined based upon a “relief from royalty” approach. The “relief from royalty” method is based on the premise that a third party would be willing to pay a royalty to use these assets owned by the subject company. The projected royalties are converted into their present value equivalents through the application of a risk adjusted discount rate. The customer relationships were valued based on an “excess earnings method.” The “excess earnings method” measures the historical customer churn analysis and discussions with management extended until excess earning cash flow approximates zero. The non-compete agreements were valued based on a “with and without” approach. The “with and without” method measures an asset value by estimating the difference in cash flows generated by the business with the asset in-use versus without the asset. The difference in cash flows is attributable to incremental earnings or cost savings associated with the asset. These fair value measurements are based on significant unobservable inputs, based on management’s estimates and assumptions. The fair value of the identifiable assets, including the intangible assets noted above, may be impacted by the Company’s evaluation of deferred taxes as further discussed below and possibly by future factors that may or may not impact the fair value of the identifiable assets, including the intangible assets noted above. The Company recorded the excess of the aggregate purchase price over the estimated fair values of the identifiable assets acquired as goodwill, which is not deductible for tax purposes. Goodwill is primarily attributable to the benefits the Company expects to realize by expanding its product offerings and addressable markets, thereby contributing to an expanded revenue base. The Company will also increase the size of its sales organization, while realizing cost synergies associated with eliminating redundant positions, primarily in selling, general and administrative functions. The assets and liabilities assumed in the acquisition have been included in the Company’s condensed consolidated balance sheet as of September 30, 2015. The results of X-spine operations were included in the Company’s condensed consolidated financial statements from the Acquisition Date. The Company is currently evaluating the impact of the X-spine acquisition on reportable operating segments requirements. Acquisition Costs Acquisition-related expenses were $ 3.9 Integration expenses include samples, travel and meetings, severance due to reduction in force, retention bonuses and software. We anticipate additional integration expenses to occur during the fourth quarter of 2015 and the first quarter of 2016. Taxes The Company did not acquire X-spine's net operating loss carryforwards for federal tax purposes because X-spine was an S-corporation tax filer prior to the acquisition and any carryforwards were taken by the former shareholders of X-spine in their federal tax filings. The Company is currently evaluating the realizability of the net deferred tax assets acquired net of the deferred tax liabilities that may arise from the recording of intangible assets as part of the purchase price allocation. Given its significant prior accumulated tax losses, the Company does not expect to incur U.S. federal tax expense in the year ending December 31, 2015 or the foreseeable future. The Company does, however, expect to incur state tax expense during 2015. Unaudited Supplemental Pro Forma Financial Information The unaudited pro forma results presented below include the combined results of both entities as if the acquisition had been consummated as of January 1, 2014. Certain pro forma adjustments have been made to reflect the impact of the purchase transaction, primarily consisting of amortization of intangible assets with determinable lives and interest expense on long-term debt. In addition, certain historical expenses, such as warrant expense and interest expense associated with debt that was immediately repaid, were eliminated from these pro-forma results. The pro forma information does not necessarily reflect the actual results of operations had the acquisition been consummated at the beginning of the fiscal reporting period indicated nor is it indicative of future operating results. The pro forma information does not include any adjustment for potential revenue enhancements, cost synergies or other operating efficiencies that could result from the acquisition. Three Months Ended September 30, Nine Months Ended September 30, 2015 2014 2015 2014 Revenue $ 20,901,292 $ 19,619,310 $ 64,401,225 $ 58,135,543 Net loss $ (5,357,091) $ (2,769,827) $ (16,061,103) $ (11,250,171) |
Equity
Equity | 9 Months Ended |
Sep. 30, 2015 | |
Equity [Abstract] | |
Equity | (3) Equity During the first quarter of 2014, the Company issued 150,000 4 In August 2014, the Company offered 1,143,000 5.70 571,500 7.12 6.5 5.9 The warrants have a five year term and expire on August 6, 2019. We entered into a Common Stock Purchase Agreement on March 16, 2015, as amended and restated April 17, 2015, with Aspire Capital which provides that, upon the terms and subject to the conditions and limitations set forth therein, Aspire Capital is committed to purchase up to an aggregate of $ 10.0 207,182 750,000 154,189 417,000 1,387,439 Under the Common Stock Purchase Agreement, we have the right, at our sole discretion, to present Aspire Capital with purchase notices, directing Aspire Capital (as principal) to purchase up to 50,000 500,000 • the lowest sale price of our common stock on the purchase date; or • the arithmetic average of the three lowest closing sale prices for our common stock during the ten consecutive trading days ending on the trading day immediately preceding the purchase date. In addition, we also have the right to present Aspire Capital with volume-weighted average price purchase notices directing Aspire Capital to purchase an amount of our common stock equal to up to 30 on the next trading day, subject to the terms, conditions and limitations in the Purchase Agreement. The Purchase Agreement may be terminated by us at any time, at our discretion, without any penalty or cost to us. The Purchase Agreement also provides for customary events of default, upon the occurrence of which Aspire Capital may terminate the Purchase Agreement. Aspire Capital has agreed that neither it nor any of its agents, representatives or affiliates shall engage in any direct or indirect short-selling or hedging of our common stock during any time prior to the termination of the Purchase Agreement. Any proceeds we receive under the Purchase Agreement are expected to be used for working capital and general corporate purposes. On July 31, 2015, the Company acquired all of the outstanding capital stock of X-spine for approximately $ 60 13 4,242,655 Related to the acquisition, on October 8, 2015 the Company granted 78,510 3.19 250,447 On September 4, 2015, the Company sold an aggregate of 140,053 515,395 |
Inventories
Inventories | 9 Months Ended |
Sep. 30, 2015 | |
Inventory Disclosure [Abstract] | |
Inventories | Inventories consist of the following: September 30, December 31, 2015 2014 Current inventories Raw materials $ 4,685,993 $ 3,836,635 Work in process 3,089,413 2,484,635 Finished goods 17,639,292 5,163,458 25,414,698 11,484,728 Reserve for obsolescence (3,372,190) (1,926,080) Current inventories, total 22,042,508 9,558,648 Non-current inventories Finished goods 2,177,090 2,860,248 Reserve for obsolescence (495,952) (925,990) Non-current inventories, total 1,681,138 1,934,258 Total inventories $ 23,723,646 $ 11,492,906 |
Impairment of Assets
Impairment of Assets | 9 Months Ended |
Sep. 30, 2015 | |
Impairment or Disposal of Tangible Assets Disclosure [Abstract] | |
Impairment of Assets | (5) Impairment of Assets During the fourth quarter of 2014, management decided to dispose of a group of components because of a shift in strategy for the Company. The component groups consisted of the inventory and fixed assets associated with the Device Coatings and Cranial Maxillofacial Fixation (CMF) lines of business. Sales for these product lines represented less than 1 1 Total assets associated with the two lines at December 31, 2014 included $ 80,042 832,507 912,549 0 The sale of the CMF inventory occurred during the first quarter of 2015 and did not result in any tangible payment to the Company. The sale of the Device Coatings line of business occurred in the third quarter of 2015. The terms of the sale call for cash consideration to the Company of approximately $ 250,000 additional contingent 100,000 51,476 During the third quarter of 2015, Intangible Assets were reviewed and found to be impaired. The impact, net of amortization, was $ 285,224 |
Property and Equipment, Net
Property and Equipment, Net | 9 Months Ended |
Sep. 30, 2015 | |
Property, Plant and Equipment [Abstract] | |
Property and Equipment, Net | (6) Property and Equipment, Net September 30, December 31, 2015 2014 Buildings $ 1,657,579 $ 1,657,579 Equipment 5,279,695 4,724,608 Computer equipment 364,966 225,009 Computer software 469,301 345,039 Furniture and fixtures 256,721 153,834 Leasehold improvements 2,477,281 2,380,617 Vehicles 10,000 41,099 Surgical instruments 6,610,189 - Total cost 17,125,732 9,527,785 Less: accumulated depreciation (5,692,668) (4,873,258) $ 11,433,064 $ 4,654,527 The Company leases certain equipment under capital leases. For financial reporting purposes, minimum lease payments relating to the assets have been capitalized. As of September 30, 2015, the Company has recorded $ 461,036 199,020 Maintenance and repairs expense for the nine months of 2015 and 2014 was $ 272,811 233,547 563,790 440,397 |
Intangible Assets
Intangible Assets | 9 Months Ended |
Sep. 30, 2015 | |
Goodwill and Intangible Assets Disclosure [Abstract] | |
Intangible Assets | (7) Intangible Assets The Company has applied for various patents with regards to processes for its products. September 30, December 31, 2015 2014 Intellectual Property Gross carrying value $ 43,691,182 $ 1,036,580 Accumulated amortization (1,467,326) (381,090) Net carrying value $ 42,223,856 $ 655,490 Aggregate amortization expense: $ 1,423,983 $ 77,022 Remainder of 2015 $ 2,050,466 2016 4,465,216 2017 4,625,114 2018 4,640,027 2019 4,531,176 Thereafter 21,911,857 Total $ 42,223,856 |
Accrued Liabilities
Accrued Liabilities | 9 Months Ended |
Sep. 30, 2015 | |
Payables and Accruals [Abstract] | |
Accrued Liabilities | (8) Accrued Liabilities September 30, December 31, 2015 2014 Accrued stock compensation $ 91,741 $ - Wages/commissions payable 2,547,860 1,434,743 Accrued integration expense 241,132 - Other accrued expenses 3,836,164 486,558 $ 6,716,897 $ 1,921,301 |
Long-Term Debt
Long-Term Debt | 9 Months Ended |
Sep. 30, 2015 | |
Debt Disclosure [Abstract] | |
Long-term Debt | On March 6, 2014, we entered into a Sixth Amendment to our Credit Agreement with ROS whereby we borrowed an additional $ 4.0 150,000 On July 31, 2015, concurrent with the acquisition of X-spine, we completed an offering of $ 65.0 6.00 52.0 3 The Notes bear interest at a rate equal to 6.00 At any time prior to the close of business on the second business day immediately preceding the maturity date, holders may convert their Notes into shares of Xtant common stock (together with cash in lieu of fractional shares) at an initial conversion rate of 257.5163 1,000 3.88 100 The Notes are Xtant’s senior, unsecured obligations, rank equal in right of payment with its existing and future unsecured indebtedness that is not junior to the Notes, are senior in right of payment to any of its existing and future indebtedness that is expressly subordinated to the Notes, and are effectively subordinated to its existing and future secured indebtedness to the extent of the value of the collateral securing such indebtedness. The Notes are structurally subordinated to all existing and future indebtedness and other liabilities, including trade payables, and (to the extent Xtant is not a holder thereof) preferred equity, if any, of its subsidiaries. Amended and Restated Credit Agreement On July 31, 2015, we refinanced approximately $ 24 18 July 31, 2020 We accounted for the Notes and for the New Facility with ROS in accordance with ASC Subtopic 470-50, Debt Modifications and Extinguishments, and ASC Subtopic 470-60, Troubled Debt Restructurings by Debtors. Based on the facts and circumstances surrounding the changes to the loan and applying the calculation methodology per the above mentioned ASC subtopics, the Company recognized a gain from the extinguishment of debt of $ 2,345,019 In addition, the Company calculated a fair value of the New Facility on a non-recurring basis by taking the five year cash flow and discounting it at a market interest rate. There was no significant difference between the calculated value and the stated value of the New Facility. Approximately $ 4.8 2.2 2.6 September 30, December 31, 2015 2014 Loan payable to ROS Acquisition Offshore (See details above) $ 42,000,000 $ 24,000,000 Adjustment fee was payable to ROS Acquisition Offshore, due in August 2019 - 700,000 6% convertible senior unsecured notes due 2021 (See details above) 68,000,000 PIK Interest payable to ROS 1,067,500 6.00% loan payable to Valley Bank of Belgrade, $10,746 monthly payments including interest, maturing December 24, 2030; secured by building 1,287,146 1,325,814 112,354,646 26,025,814 Less: current portion (53,172) (50,671) Debt discount - (5,104,813) Long-term debt $ 112,301,474 $ 20,870,330 Remainder of 2015 $ 12,953 2016 53,796 2017 57,114 2018 60,637 2019 64,377 Thereafter 112,105,769 Total $ 112,354,646 |
Stock-Based Compensation
Stock-Based Compensation | 9 Months Ended |
Sep. 30, 2015 | |
Disclosure of Compensation Related Costs, Share-based Payments [Abstract] | |
Stock-Based Compensation | (10) Stock-Based Compensation The Amended and Restated Xtant Medical Equity Incentive Plan ("The Plan") provides for stock awards, including options and performance stock awards, to be granted to employees, consultants, independent contractors, officers and directors. The purpose of the Plan is to enable us to attract, retain and motivate key employees, directors and, on occasion, independent consultants, by providing them with stock options and restricted stock grants. Stock options granted under the Plan may be either incentive stock options to employees, as defined in Section 422A of the Internal Revenue Code of 1986, or non-qualified stock options. The Plan is administered by the compensation committee of our Board of Directors. Stock options granted under the Plan are generally not transferable, vest in installments over the requisite service period and are exercisable during the stated contractual term of the option only by such optionee. The exercise price of all incentive stock options granted under the Plan must be at least equal to the fair market value of the shares of common stock on the date of the grant. 1,400,000 480,000 Stock compensation expense recognized in the statement of operations for the nine months ended September 30, 2015 and 2014 is based on awards ultimately expected to vest and reflects an estimate of awards that will be forfeited. ASC 718 requires forfeitures to be estimated at the time of grant and revised, if necessary, in subsequent periods if actual forfeitures differ from those estimates. The estimated fair value of stock options granted is done using the Black-Scholes-Merton method applied to individual grants. Nine Months Ended Nine Months Ended September 30, 2015 September 30, 2014 Risk-free interest rate 1.30 % 1.81 % Expected volatility 75 % 58 % Expected term 6.0 Years 5.25 Years Expected forfeiture rate 20 % 20 % Dividend yield 0 % 0 % In July 2014, the Company granted the President of Bacterin an option to purchase 55,000 200,000 2015 2014 Weighted Weighted Average Average Weighted Fair Weighted Fair Average Value at Average Value at Exercise Grant Exercise Grant Shares Price Date Shares Price Date Outstanding at January 1 695,336 $ 11.09 $ 5.35 758,328 $ 14.90 $ 8.60 Granted 45,000 4.00 2.81 169,200 5.78 5.00 Exercised - - - (6,666) 10.00 .04 Cancelled or expired (31,604) 12.71 6.02 (147,396) 19.95 9.20 Outstanding at September 30 708,732 $ 10.54 $ 5.29 773,466 $ 11.99 $ 7.10 Exercisable at September 30 388,498 $ 13.53 $ 6.43 297,962 $ 17.03 $ 6.50 The aggregate intrinsic value of options outstanding and the aggregate intrinsic value of exercisable options as of September 30, 2015 were approximately $ 26,000 and are equal because no options were exercisable at September 30, 2015. As of September 30, 2015, there were 320,234 unvested options with a weighted average fair value at the grant date of $ 3.90 799,901 From time to time we may grant stock options and stock grants to consultants. We account for consultant stock options in accordance with ASC 505-50. Consulting expense for the grant of stock options to consultants is determined based on the estimated fair value of the stock options at the measurement date as defined in ASC 505-50 and is recognized over the vesting period. The Company recognized non-cash consulting expense for the nine months ended September 30, 2015 and 2014 as $ 190,869 81,924 Total share based compensation recognized for employees, directors and consultants was $ 479,289 938,785 On November 10, 2014, the company granted 39,312 4.07 160,000 On July 1, 2015, the company granted 58,820 3.40 200,000 50,000 On October 8, 2015 the Company granted 78,510 3.19 250,447 41,741 |
Warrants
Warrants | 9 Months Ended |
Sep. 30, 2015 | |
Warrants and Rights Note Disclosure [Abstract] | |
Warrants | Warrants Weighted Common Average Stock Exercise Warrants Price Outstanding as of January 1, 2014 1,087,820 $ 16.20 Issued 571,500 7.12 Expired (4,000) 20.00 Outstanding at January 1, 2015 1,655,320 $ 13.06 Issued - - Expired (467,799) 22.55 Outstanding at September 30, 2015 1,187,521 $ 9.32 We utilize a valuation model to determine the fair market value of the warrants accounted for as liabilities. The valuation model accommodates the probability of exercise price adjustment features as outlined in the warrant agreements. We recorded an unrealized loss of $ 78,923 Nine Months ended September 30, 2015 2014 Value of underlying common stock (per share) $ 3.26 $ 4.48 Risk free interest rate 1.37 % 1.81 % Expected term 4.25 years 5.25 years Volatility 75 % 58 % Dividend yield 0 % 0 % 2015 2014 Balance at January 1, 1,171,692 600,192 Derivative warrants issued - 571,500 Derivative warrants exercised - - Balance at September 30, 1,171,692 1,171,692 |
Commitments and Contingencies
Commitments and Contingencies | 9 Months Ended |
Sep. 30, 2015 | |
Commitments and Contingencies Disclosure [Abstract] | |
Commitments and Contingencies | (12) Commitments and Contingencies Operating Leases We lease three office Remainder of 2015 $ 175,055 2016 609,317 2017 280,527 2018 286,754 2019 166,940 Thereafter 559,000 Total $ 2,077,593 Rent expense was $ 484,064 245,884 Indemnifications Our arrangements generally include limited warranties and certain provisions for indemnifying customers against liabilities if our products or services infringe a third-party's intellectual property rights. To date, we have not incurred any material costs as a result of such warranties or indemnification provisions and have not accrued any liabilities related to such obligations in the accompanying financial statements. We have also agreed to indemnify our directors and executive officers for costs associated with any fees, expenses, judgments, fines and settlement amounts incurred by any of these persons in any action or proceeding to which any of those persons is, or is threatened to be, made a party by reason of the person's service as a director or officer, including any action by us, arising out of that person's services as our director or officer or that person's services provided to any other company or enterprise at our request. Litigation Other than as previously disclosed in our Form 10-Q for the quarterly period ended June 30, 2015, there is no material litigation pending to which we are a party or to which our property is subject, other than ordinary routine litigation incidental to our business, including product liability disputes. |
Income Taxes
Income Taxes | 9 Months Ended |
Sep. 30, 2015 | |
Income Tax Disclosure [Abstract] | |
Income Taxes | (13) Income Taxes In evaluating the realizability of the net deferred tax assets, we take into account a number of factors, primarily relating to the ability to generate taxable income. Where it is determined that it is likely that we will be unable to realize deferred tax assets, a valuation allowance is established against the portion of the deferred tax asset. Because it cannot be accurately determined when or if we will become profitable, a valuation allowance was provided against the entire deferred income tax asset balance. The 2011 through 2014 tax years remain open to examination by the Internal Revenue Service and the 2009 to 2014 tax years remain open to the Montana Department of Revenue and Ohio Department of Revenue. These taxing authorities have the authority to examine those tax years until the applicable statute of limitations expire. The Company did not recognize any interest or penalties related to income taxes for the nine months ended September 30, 2015 and 2014. |
Supplemental Disclosure of Cash
Supplemental Disclosure of Cash Flow Information | 9 Months Ended |
Sep. 30, 2015 | |
Supplemental Cash Flow Elements [Abstract] | |
Supplemental Disclosure of Cash Flow Information | (14) Supplemental Disclosure of Cash Flow Information Nine months Ended September 30, 2015 2014 Supplemental disclosure of cash flow information Cash paid during the period for: Interest $ 2,372,453 $ 2,379,439 Non-cash activities: Issuance of shares related to debt issuance $ - $ 1,094,999 Issuance of capital leases $ 70,020 $ - Issuance of share for non-cash consulting expense $ 190,869 $ 81,924 Issuance of restricted stock to employees $ 41,741 $ 142,601 Issuance of shares in conjunction with the acquisition of X-spine $ 14,934,146 $ - |
Related Party Transactions
Related Party Transactions | 9 Months Ended |
Sep. 30, 2015 | |
Related Party Transactions [Abstract] | |
Related Party Transactions | (15) Related Party Transactions Darrel Holmes, our Chief Operating Officer, and Mitchell Godfrey, a former director, serve on the board of American Donor Services Inc. (“ADS”), and Mr. Godfrey also serves as secretary and treasurer for ADS. Mssrs. Godfrey and Holmes each receive $ 5,000 1,367,487 1,900,952 Certain of X-spine’s former shareholders, now own over 10% of our common stock as of the Acquisition Date, and have owned a controlling interest of X-spine’s largest supplier, Norwood Tool Company d/b/a Norwood Medical. For the three months ended September 30, 2015, Norwood Medical sold approximately $337,000 of supplies to the Company (See Item 1A. Risk Factors - Risks Related to X-spine’s Business, “ X-spine’s business depends, in part, on a relationship with a key supplier, which is a related party” below). Unless delegated to the Compensation Committee by the Board of Directors, the Audit Committee or the disinterested members of the full Board of Directors reviews and approves all related party transactions. |
Subsequent Events
Subsequent Events | 9 Months Ended |
Sep. 30, 2015 | |
Subsequent Events [Abstract] | |
Subsequent Events | (16) Subsequent Events On October 23, 2015, the Company entered into a sale-leaseback transaction for the property located at 664 Cruiser Lane, Belgrade, Montana, 59714 which formerly secured the 6% loan payable to Valley Bank of Belgrade (See Note 9, “Long-Term Debt” above) Our new lease agreement has a ten year term with an option to extend for two additional five year terms for a total of ten years. On October 19, 2015, our common stock began trading on the NYSE MKT under the new symbol “XTNT”. |
Business Description and Summ22
Business Description and Summary of Significant Accounting Policies (Policies) | 9 Months Ended |
Sep. 30, 2015 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Name Change | Name Change Following the closing of the acquisition, on July 31, 2015, Bacterin International Holdings, Inc. changed its name to Xtant Medical Holdings, Inc. |
New Subsidiary | New Subsidiary On August 6, 2015 Xtant formed a new wholly owned subsidiary, Xtant Medical, Inc., a Delaware corporation. The creation of the subsidiary will facilitate the integration of Bacterin and X-spine. |
Reverse Stock Split | Reverse Stock Split Xtant completed a 1:10 reverse split |
Public Offering | Public Offering In August 2014, Xtant offered 1,143,000 5.70 571,500 7.12 6.5 5.9 |
Aspire Capital Transaction | Aspire Capital Transaction We entered into a Common Stock Purchase Agreement on March 16, 2015, as amended and restated on April 17, 2015 (the “Purchase Agreement”), with Aspire Capital Fund, LLC (“Aspire Capital”), which provides that, upon the terms and subject to the conditions and limitations set forth therein, Aspire Capital is committed to purchase up to an aggregate of $ 10.0 207,182 750,000 154,189 3.62 558,185 417,000 1,387,439 |
Private Placement Offering | Private Placement Offering During the third quarter of 2015, we issued 140,053 515,395 |
Concentrations and Credit Risk | Concentrations and Credit Risk The Company’s accounts receivable are due from a variety of health care organizations and distributors throughout the world. Approximately 95 98 for more than 10% For the three months ended September 30, 2015, approximately 13% of total cost of goods sold was with one vendor, Norwood Medical (See note 15, “Related Party Transactions”). Revenue by geographical region is as follows: Nine Months Ended September 30, 2015 2014 United States $ 35,419,434 $ 25,792,878 Rest of World 1,669,315 457,529 $ 37,088,749 $ 26,250,407 |
Use of Estimates | Use of Estimates The preparation of the financial statements requires management of the Company to make a number of estimates and assumptions relating to the reported amount of assets and liabilities and the disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenue and expenses during the period. Significant estimates include the carrying amount of property and equipment, goodwill, and intangible assets; valuation allowances for trade receivables, inventory valuation, and deferred income tax assets; valuation of the warrant derivative liability; inventory reserve; royalty liability; and estimates for the fair value of stock options grants and other equity awards upon which the Company determines stock-based compensation expense. Actual results could differ from those estimates. |
Long-Lived Assets | Long-Lived Assets Long-lived assets, including intangible assets, are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. Recoverability of assets to be held and used is measured by a comparison of the carrying amount of an asset to future net cash flows expected to be generated by the asset. If such assets are considered to be impaired, the impairment to be recognized is measured by the amount by which the carrying amount of the assets exceeds the estimated fair value of the assets. See Note 5, “Impairment of Assets”. |
Goodwill | Goodwill Goodwill represents the excess of costs over fair value of assets of businesses acquired. Goodwill and intangible assets acquired in a purchase business combination and determined to have indefinite useful lives are not amortized, instead are tested for impairment at least annually and whenever events or circumstances indicate the carrying amount of the asset may not be recoverable. In its evaluation of goodwill, the Company performs an assessment of qualitative factors to determine if it is more-likely-than-not that goodwill might be impaired and whether it is necessary to perform the two-step goodwill impairment. The Company conducts its annual impairment test on December 31 of each year. |
Revenue Recognition | Revenue is recognized when all of the following criteria are met: a) the Company has entered into a legally binding agreement with the customer; b) the products or services have been delivered; c) the Company's fee for providing the products and services is fixed or determinable; and d) collection of the Company’s fee is probable. The Company’s policy is to record revenue net of any applicable sales, use, or excise taxes. If an arrangement includes a right of acceptance or a right to cancel, revenue is recognized when acceptance is received or the right to cancel has expired. The Company ships to certain customers under consignment arrangements whereby the Company’s product is stored by the customer. The customer is required to report the use to the Company and upon such notice, the Company invoices the customer and revenue is recognized when above criteria have been met. % |
Advertising Costs | Advertising Costs The Company expenses advertising costs as incurred. The Company had advertising expense of $ 93,854 29,027 |
Research and Development | Research and Development Research and development costs, which are principally related to internal costs for the development of new regenerative orthopedic products technologies and processes are expensed as incurred. |
Net Loss Per Share | Net Loss Per Share Basic net income (loss) per share is computed by dividing net income (loss) by the weighted average number of common shares outstanding. Shares issued during the period and shares reacquired during the period are weighted for the portion of the period that they were outstanding. Diluted net income (loss) per share is computed in a manner consistent with that of basic earnings per share while giving effect to all potentially dilutive common shares outstanding during the period, which include the assumed exercise of stock options and warrants using the treasury stock method. Diluted net loss per share was the same as basic net loss per share for the three and nine months ended September 30, 2015 and 2014, as shares issuable upon the exercise of stock options and warrants were anti-dilutive as a result of the net losses incurred for those periods. Dilutive earnings per share are not reported as their effects of including 1,896,253 1,877,948 |
Fair Value of Financial Instruments | Fair Value of Financial Instruments The carrying values of financial instruments, including trade accounts receivable, accounts payable, other accrued expenses and long-term debt, approximate their fair values based on terms and related interest rates. The Company follows a framework for measuring fair value. The framework provides a fair value hierarchy that prioritizes the inputs to valuation techniques used to measure fair value. The hierarchy gives the highest priority to unadjusted quoted prices in active markets for identical assets or liabilities (Level 1) and the lowest priority to unobservable inputs (Level 3). The three levels of the fair value hierarchy are described below: Level 1: Inputs to the valuation methodology are unadjusted quoted prices for identical assets or liabilities in active markets. Level 2: Inputs to the valuation methodology include quoted prices for similar assets and liabilities in active markets, and inputs that are observable for the asset or liability, either directly or indirectly, for substantially the full term of the financial instrument. Level 3: Inputs to the valuation methodology are unobservable and significant to the fair value measurement. A financial instrument's level within the fair value hierarchy is based on the lowest level of any input that is significant to the fair value measurement. During the three and nine months ended September 30, 2015 and 2014, there was no reclassification in financial assets or liabilities between Level 1, 2 or 3 categories. The following table sets forth by level, within the fair value hierarchy, our liabilities as of September 30, 2015 and December 31, 2014 that are measured at fair value on a recurring basis: As of As of September 30, December 31, 2015 2014 Level 1 - - Level 2 - - Level 3 $ 1,399,294 $ 1,320,371 The valuation technique used to measure fair value of the warrant liability is based on a valuation model and significant assumptions and inputs determined by us (See Note 11, “Warrants” below). Level 3 Changes Warrant derivative liability Balance at January 1, 2015 $ 1,320,371 Loss recognized in earnings in first half of 2015 476,289 Balance at June 30, 2015 1,796,660 Gain recognized in earnings in third quarter of 2015 (397,366) Balance at September 30, 2015 $ 1,399,294 During the first nine months ended September 30, 2015, the Company did not change any of the valuation techniques used to measure its liabilities at fair value. |
Recent Accounting Pronouncements | Recent Accounting Pronouncements In November 2014, FASB issued ASU No. 2014-08, Presentation of Financial Statements (Topic 201) and Property, Plant and Equipment (Topic 360) - Reporting Discontinued Operations and Disclosures of Disposals of Components of an Entity. The amendments in this Update are effective for the annual period ending after December 15, 2014, and interim periods within those years. Early adoption is permitted only for disposals (or classifications as held for sale) that have not been reported in financial statements previously issued or available for issuance. ASU 2014-08 is not expected to have a material impact on our consolidated financial position, results of operations, or cash flows. In April 2015, the FASB issued ASU 2015-3, to simplify the presentation of debt issuance costs. This update requires that debt issuance costs be presented in the balance sheet as a direct deduction from the carrying amount of the associated debt liability, consistent with the required presentation for debt discounts. This update is effective for interim and annual periods beginning after December 15, 2015. ASU 2015-3 is not expected to have a material impact. |
Business Description and Summ23
Business Description and Summary of Significant Accounting Policies (Tables) | 9 Months Ended |
Sep. 30, 2015 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Schedule of Revenues by Geographic Region | Revenue by geographical region is as follows: Nine Months Ended September 30, 2015 2014 United States $ 33,857,591 $ 25,792,878 Rest of World 3,231,158 457,529 $ 37,088,749 $ 26,250,407 |
Schedule of Assets and Liabilities Measured on Recurring Basis | Warrant derivative liability As of As of September 30, December 31, 2015 2014 Level 1 - - Level 2 - - Level 3 $ 1,399,294 $ 1,320,371 |
Schedule of Fair Value, Liabilities Measured on Recurring Basis, Unobservable Input Reconciliation | The following is a reconciliation of the beginning and ending balances for liabilities measured at fair value on a recurring basis using significant unobservable inputs (Level 3) during the nine months ended September 30, 2015: Warrant derivative liability Balance at January 1, 2015 $ 1,320,371 Loss recognized in earnings in first half of 2015 476,289 Balance at June 30, 2015 1,796,660 Gain recognized in earnings in third quarter of 2015 (397,366) Balance at September 30, 2015 $ 1,399,294 |
Business Combination (Tables)
Business Combination (Tables) | 9 Months Ended |
Sep. 30, 2015 | |
Business Combinations [Abstract] | |
Schedule of Business Combinations Purchase Price Allocation | The components of the aggregate preliminary purchase price for the acquisition were as follows (in thousands): Cash $ 73,033,018 Fair value of Xtant shares 14,934,146 Total purchase price $ 87,967,164 |
Schedule of Recognized Identified Assets Acquired and Liabilities Assumed | The following table summarizes the allocation of assets acquired and liabilities assumed as of the Acquisition Date: Amortization Allocation of period (in purchase price years) Accounts receivable $ 5,989,904 Inventories 13,132,697 Prepaids and other current assets 208,116 Property and equipment, net 7,409,667 Cash 57,818 Total tangible assets acquired 26,798,202 Less: liabilities assumed 6,021,756 Net tangible assets less liabilities $ 20,776,446 Intangible assets: Technology 28,698,700 10 Customer relationships 9,911,000 14 Tradename 4,543,300 10 Non-compete agreements 40,500 3 Goodwill 23,997,218 Total purchase price $ 87,967,164 |
Business Acquisition, Pro Forma Information | Three Months Ended September 30, Nine Months Ended September 30, 2015 2014 2015 2014 Revenue $ 20,901,292 $ 19,619,310 $ 64,401,225 $ 58,135,543 Net loss $ (5,357,091) $ (2,769,827) $ (16,061,103) $ (11,250,171) |
Inventories (Tables)
Inventories (Tables) | 9 Months Ended |
Sep. 30, 2015 | |
Inventory Disclosure [Abstract] | |
Schedule of Inventories | Inventories consist of the following: September 30, December 31, 2015 2014 Current inventories Raw materials $ 4,685,993 $ 3,836,635 Work in process 3,089,413 2,484,635 Finished goods 17,639,292 5,163,458 25,414,698 11,484,728 Reserve for obsolescence (3,372,190) (1,926,080) Current inventories, total 22,042,508 9,558,648 Non-current inventories Finished goods 2,177,090 2,860,248 Reserve for obsolescence (495,952) (925,990) Non-current inventories, total 1,681,138 1,934,258 Total inventories $ 23,723,646 $ 11,492,906 |
Property and Equipment, Net (Ta
Property and Equipment, Net (Tables) | 9 Months Ended |
Sep. 30, 2015 | |
Property, Plant and Equipment [Abstract] | |
Schedule of Property and Equipment, Net | Property and equipment, net are as follows: September 30, December 31, 2015 2014 Buildings $ 1,657,579 $ 1,657,579 Equipment 5,279,695 4,724,608 Computer equipment 364,966 225,009 Computer software 469,301 345,039 Furniture and fixtures 256,721 153,834 Leasehold improvements 2,477,281 2,380,617 Vehicles 10,000 41,099 Surgical instruments 6,610,189 - Total cost 17,125,732 9,527,785 Less: accumulated depreciation (5,692,668) (4,873,258) $ 11,433,064 $ 4,654,527 |
Intangible Assets (Tables)
Intangible Assets (Tables) | 9 Months Ended |
Sep. 30, 2015 | |
Goodwill and Intangible Assets Disclosure [Abstract] | |
Schedule of Intangible Assets | The following table sets forth information regarding intangible assets: September 30, December 31, 2015 2014 Intellectual Property Gross carrying value $ 43,691,182 $ 1,036,580 Accumulated amortization (1,467,326) (381,090) Net carrying value $ 42,223,856 $ 655,490 Aggregate amortization expense: $ 1,423,983 $ 77,022 |
Schedule of Estimated Amortization Expense for Intangible Assets | The following is a summary of estimated future amortization expense for intangible assets as of September 30, 2015: Remainder of 2015 $ 2,050,466 2016 4,465,216 2017 4,625,114 2018 4,640,027 2019 4,531,176 Thereafter 21,911,857 Total $ 42,223,856 |
Accrued Liabilities (Tables)
Accrued Liabilities (Tables) | 9 Months Ended |
Sep. 30, 2015 | |
Payables and Accruals [Abstract] | |
Schedule of Accrued Liabilities | Accrued liabilities consist of the following: September 30, December 31, 2015 2014 Accrued stock compensation $ 91,741 $ - Wages/commissions payable 2,547,860 1,434,743 Accrued integration expense 241,132 - Other accrued expenses 3,836,164 486,558 $ 6,716,897 $ 1,921,301 |
Long-Term Debt (Tables)
Long-Term Debt (Tables) | 9 Months Ended |
Sep. 30, 2015 | |
Debt Disclosure [Abstract] | |
Schedule of Long-term Debt | Long-term debt consists of the following: September 30, December 31, 2015 2014 Loan payable to ROS Acquisition Offshore (See details above) $ 42,000,000 $ 24,000,000 Adjustment fee was payable to ROS Acquisition Offshore, due in August 2019 - 700,000 6% convertible senior unsecured notes due 2021 (See details above) 68,000,000 PIK Interest payable to ROS 1,067,500 6.00% loan payable to Valley Bank of Belgrade, $10,746 monthly payments including interest, maturing December 24, 2030; secured by building 1,287,146 1,325,814 112,354,646 26,025,814 Less: current portion (53,172) (50,671) Debt discount - (5,104,813) Long-term debt $ 112,301,474 $ 20,870,330 |
Schedule of Maturities of Long-term Debt | The following is a summary of maturities due on the debt as of September 30, 2015: Remainder of 2015 $ 12,953 2016 53,796 2017 57,114 2018 60,637 2019 64,377 Thereafter 112,105,769 Total $ 112,354,646 |
Stock-Based Compensation (Table
Stock-Based Compensation (Tables) | 9 Months Ended |
Sep. 30, 2015 | |
Disclosure of Compensation Related Costs, Share-based Payments [Abstract] | |
Schedule of Share-based Payment Award, Stock Options, Valuation Assumptions | Key assumptions used to estimate the fair value of stock awards are as follows: Nine Months Ended Nine Months Ended September 30, 2015 September 30, 2014 Risk-free interest rate 1.30 % 1.81 % Expected volatility 75 % 58 % Expected term 6.0 Years 5.25 Years Expected forfeiture rate 20 % 20 % Dividend yield 0 % 0 % |
Schedule of Share-based Compensation, Stock Options, Activity | Stock option activity, including options granted under the Plan and the Non-Plan Grants, was as follows: 2015 2014 Weighted Weighted Average Average Weighted Fair Weighted Fair Average Value at Average Value at Exercise Grant Exercise Grant Shares Price Date Shares Price Date Outstanding at January 1 695,336 $ 11.09 $ 5.35 758,328 $ 14.90 $ 8.60 Granted 45,000 4.00 2.81 169,200 5.78 5.00 Exercised - - - (6,666) 10.00 .04 Cancelled or expired (31,604) 12.71 6.02 (147,396) 19.95 9.20 Outstanding at September 30 708,732 $ 10.54 $ 5.29 773,466 $ 11.99 $ 7.10 Exercisable at September 30 388,498 $ 13.53 $ 6.43 297,962 $ 17.03 $ 6.50 |
Warrants (Tables)
Warrants (Tables) | 9 Months Ended |
Sep. 30, 2015 | |
Warrants and Rights Note Disclosure [Abstract] | |
Schedule of Warrant Activity | The following table summarizes our warrant activities for the period ended September 30, 2015: Weighted Common Average Stock Exercise Warrants Price Outstanding as of January 1, 2014 1,087,820 $ 16.20 Issued 571,500 7.12 Expired (4,000) 20.00 Outstanding at January 1, 2015 1,655,320 $ 13.06 Issued - - Expired (467,799) 22.55 Outstanding at September 30, 2015 1,187,521 $ 9.32 |
Schedule of Warrant Valuation Assumptions | The estimated fair value was derived using the valuation model with the following weighted-average assumptions: Nine Months ended September 30, 2015 2014 Value of underlying common stock (per share) $ 3.26 $ 4.48 Risk free interest rate 1.37 % 1.81 % Expected term 4.25 years 5.25 years Volatility 75 % 58 % Dividend yield 0 % 0 % |
Schedule of Warrants Activities Used In Derivative Liability | The following table summarizes our activities related to warrants accounted for as a derivative liability for the nine months ended September 30, 2015 and 2014: 2015 2014 Balance at January 1, 1,171,692 600,192 Derivative warrants issued - 571,500 Derivative warrants exercised - - Balance at September 30, 1,171,692 1,171,692 |
Commitments and Contingencies (
Commitments and Contingencies (Tables) | 9 Months Ended |
Sep. 30, 2015 | |
Commitments and Contingencies Disclosure [Abstract] | |
Schedule of Future Minimum Rental Payments for Operating Leases | Future minimum payments for the next five years and thereafter as of September 30, 2015, under these leases, are as follows: Remainder of 2015 $ 175,055 2016 609,317 2017 280,527 2018 286,754 2019 166,940 Thereafter 559,000 Total $ 2,077,593 |
Supplemental Disclosure of Ca33
Supplemental Disclosure of Cash Flow Information (Tables) | 9 Months Ended |
Sep. 30, 2015 | |
Supplemental Cash Flow Elements [Abstract] | |
Supplemental Disclosure of Cash Flow Information | Supplemental cash flow information is as follows: Nine months Ended September 30, 2015 2014 Supplemental disclosure of cash flow information Cash paid during the period for: Interest $ 2,372,453 $ 2,379,439 Non-cash activities: Issuance of shares related to debt issuance $ - $ 1,094,999 Issuance of capital leases $ 70,020 $ - Issuance of share for non-cash consulting expense $ 190,869 $ 81,924 Issuance of restricted stock to employees $ 41,741 $ 142,601 Issuance of shares in conjunction with the acquisition of X-spine $ 14,934,146 $ - |
Business Description and Summ34
Business Description and Summary of Significant Accounting Policies (Details) - USD ($) | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2015 | Sep. 30, 2014 | Sep. 30, 2015 | Sep. 30, 2014 | |
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||||
Total Revenues | $ 17,693,020 | $ 8,453,504 | $ 37,088,749 | $ 26,250,407 |
US [Member] | ||||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||||
Total Revenues | 35,419,434 | 25,792,878 | ||
Rest Of World [Member] | ||||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||||
Total Revenues | $ 1,669,315 | $ 457,529 |
Business Description and Summ35
Business Description and Summary of Significant Accounting Policies (Details 1) - USD ($) | Sep. 30, 2015 | Dec. 31, 2014 |
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Warrant derivative liability | $ 1,399,294 | $ 1,320,371 |
Fair Value, Inputs, Level 1 [Member] | Fair Value, Measurements, Recurring [Member] | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Warrant derivative liability | 0 | 0 |
Fair Value, Inputs, Level 2 [Member] | Fair Value, Measurements, Recurring [Member] | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Warrant derivative liability | 0 | 0 |
Fair Value, Inputs, Level 3 [Member] | Fair Value, Measurements, Recurring [Member] | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Warrant derivative liability | $ 1,399,294 | $ 1,320,371 |
Business Description and Summ36
Business Description and Summary of Significant Accounting Policies (Details 2) - Warrant [Member] - Derivative [Member] - USD ($) | 3 Months Ended | 6 Months Ended |
Sep. 30, 2015 | Jun. 30, 2015 | |
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Balance at January 1, 2015 | $ 1,796,660 | $ 1,320,371 |
Loss recognized in earnings | (397,366) | 476,289 |
Balance at September 30, 2015 | $ 1,399,294 | $ 1,796,660 |
Business Description and Summ37
Business Description and Summary of Significant Accounting Policies (Details Textual) - USD ($) | Sep. 04, 2015 | Aug. 06, 2014 | Jul. 31, 2015 | Jul. 28, 2014 | Sep. 30, 2015 | Jun. 30, 2015 | Mar. 31, 2015 | Sep. 30, 2014 | Mar. 31, 2014 | Sep. 30, 2015 | Sep. 30, 2014 | Mar. 16, 2015 | Dec. 31, 2014 | Dec. 31, 2013 |
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||||||||||||||
Advertising Expense | $ 93,854 | $ 29,027 | ||||||||||||
Antidilutive Securities Excluded from Computation of Earnings Per Share, Amount | 1,896,253 | 1,877,948 | ||||||||||||
Royalty Revenue Description | The Company also receives royalty revenue from third parties related to licensing agreements whichrepresented less than 1% of total revenue for the three and nine months ended September 30, 2015 and 2014. | |||||||||||||
Proceeds From Issuance Or Sale Of Equity Gross | $ 6,500,000 | |||||||||||||
Stock Issued During Period, Shares, New Issues | 150,000 | |||||||||||||
Class of Warrant or Right, Exercise Price of Warrants or Rights | $ 9.32 | $ 9.32 | $ 13.06 | $ 16.2 | ||||||||||
Proceeds from Issuance or Sale of Equity, Total | $ 5,900,000 | |||||||||||||
Stockholders' Equity, Reverse Stock Split | 1:10 reverse split | |||||||||||||
Other Non Cash Expense Associated With Stock Purchase Agreement | $ 0 | $ 0 | $ 558,185 | $ 0 | ||||||||||
Business Combination, Consideration Transferred | $ 60,000,000 | |||||||||||||
Proceeds from Issuance of Private Placement | $ 515,395 | $ 0 | ||||||||||||
Debt [Member] | ||||||||||||||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||||||||||||||
Other Payments to Acquire Businesses | $ 13,000,000 | |||||||||||||
Aspire Capital Fund LLC [Member] | ||||||||||||||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||||||||||||||
Stock Issued During Period, Shares, New Issues | 417,000 | 417,000 | 207,182 | |||||||||||
Common Stock To Be Issued For Commitment Fee | 154,189 | |||||||||||||
Common Stock, Shares Subscribed but Unissued | 10,000,000 | |||||||||||||
Stock Issued During Period, Value, New Issues | $ 1,387,439 | $ 1,387,439 | $ 750,000 | |||||||||||
Share Price | $ 3.62 | |||||||||||||
Other Non Cash Expense Associated With Stock Purchase Agreement | $ 558,185 | |||||||||||||
Common Stock [Member] | ||||||||||||||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||||||||||||||
Stock Issued During Period, Shares, New Issues | 1,143,000 | |||||||||||||
Shares Issued, Price Per Share | $ 5.70 | |||||||||||||
Business Acquisition Number Of Shares Acquired | 4,240,000 | |||||||||||||
Private Placement [Member] | Common Stock [Member] | ||||||||||||||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||||||||||||||
Stock Issued During Period, Shares, New Issues | 140,053 | |||||||||||||
Proceeds from Issuance of Private Placement | $ 515,395 | |||||||||||||
August 2014 Warrants [Member] | ||||||||||||||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||||||||||||||
Class of Warrant or Right, Number of Securities Called by Warrants or Rights | 571,500 | |||||||||||||
Class of Warrant or Right, Exercise Price of Warrants or Rights | $ 7.12 | |||||||||||||
Class Of Warrant Or Right Term | 5 years | |||||||||||||
Geographic Concentration Risk [Member] | Sales Revenue, Net [Member] | US [Member] | ||||||||||||||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||||||||||||||
Concentration Risk, Percentage | 95.00% | 98.00% |
Business Combination (Details)
Business Combination (Details) $ in Thousands | Sep. 30, 2015USD ($) |
Cash | $ 73,033,018 |
Fair value of Xtant shares | 14,934,146 |
Total purchase price | $ 87,967,164 |
Business Combination (Details 1
Business Combination (Details 1) - USD ($) | 9 Months Ended | |
Sep. 30, 2015 | Dec. 31, 2014 | |
Total tangible assets acquired | $ 26,798,202 | |
Less: liabilities assumed | 6,021,756 | |
Net tangible assets less liabilities | 20,776,446 | |
Goodwill | 23,997,218 | $ 0 |
Total purchase price | 87,967,164,000 | |
Technology-Based Intangible Assets [Member] | ||
Intangible assets | $ 28,698,700 | |
Amortization period (in years) | 10 years | |
Customer Relationships [Member] | ||
Intangible assets | $ 9,911,000 | |
Amortization period (in years) | 14 years | |
Trade Names [Member] | ||
Intangible assets | $ 4,543,300 | |
Amortization period (in years) | 10 years | |
Noncompete Agreements [Member] | ||
Intangible assets | $ 40,500 | |
Amortization period (in years) | 3 years | |
Accounts Receivable [Member] | ||
Total tangible assets acquired | $ 5,989,904 | |
Inventories [Member] | ||
Total tangible assets acquired | 13,132,697 | |
Prepaids And Other Current Assets [Member] | ||
Total tangible assets acquired | 208,116 | |
Property And Equipment Net [Member] | ||
Total tangible assets acquired | 7,409,667 | |
Cash [Member] | ||
Total tangible assets acquired | $ 57,818 |
Business Combination (Details 2
Business Combination (Details 2) - USD ($) | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2015 | Sep. 30, 2014 | Sep. 30, 2015 | Sep. 30, 2014 | |
Revenue | $ 20,901,292 | $ 19,619,310 | $ 64,401,225 | $ 58,135,543 |
Net loss | $ (5,357,091) | $ (2,769,827) | $ (16,061,103) | $ (11,250,171) |
Business Combination (Details T
Business Combination (Details Textual) - USD ($) shares in Thousands | 1 Months Ended | 3 Months Ended | 9 Months Ended | |||
Jul. 31, 2015 | Jul. 31, 2014 | Sep. 30, 2015 | Sep. 30, 2014 | Sep. 30, 2015 | Sep. 30, 2014 | |
Payments to Acquire Businesses, Gross | $ 250,000 | |||||
Debt Instrument, Face Amount | $ 65,000,000 | |||||
Debt Instrument, Interest Rate During Period | 6.00% | |||||
Net Income (Loss) Attributable to Parent, Total | $ (6,688,974) | $ (1,165,783) | (13,761,754) | $ (7,205,572) | ||
Business Combination, Acquisition Related Costs | $ 3,900,000 | $ 3,900,000 | ||||
Xspine [Member] | ||||||
Payments to Acquire Businesses, Gross | $ 60,000,000 | |||||
Other Payments to Acquire Businesses | 13,000,000 | |||||
Stock Issued During Period, Shares, Acquisitions | 4,240 | |||||
Debt Instrument, Face Amount | $ 68,000,000 | |||||
Debt Instrument, Interest Rate During Period | 6.00% | |||||
Net Income (Loss) Attributable to Parent, Total | $ 91,000 |
Equity (Details Textual)
Equity (Details Textual) - USD ($) | Oct. 08, 2015 | Sep. 04, 2015 | Aug. 06, 2014 | Jul. 31, 2015 | Mar. 16, 2015 | Sep. 30, 2015 | Jun. 30, 2015 | Mar. 31, 2015 | Mar. 31, 2014 | Sep. 30, 2015 | Sep. 30, 2014 | Dec. 31, 2014 | Dec. 31, 2013 |
Schedule of Equity Method Investments [Line Items] | |||||||||||||
Stock issued (in shares) | 150,000 | ||||||||||||
Proceeds from Issuance or Sale of Equity, Total | $ 5,900,000 | ||||||||||||
Proceeds From Issuance Or Sale Of Equity Gross | $ 6,500,000 | ||||||||||||
Proceeds from Lines of Credit | $ 4,000,000 | ||||||||||||
Class of Warrant or Right, Exercise Price of Warrants or Rights | $ 9.32 | $ 9.32 | $ 13.06 | $ 16.2 | |||||||||
Warrant Expiration Period, Description | The warrants have a five year term and expire on August 6, 2019. | ||||||||||||
Proceeds from Issuance of Private Placement | $ 515,395 | $ 0 | |||||||||||
Restricted Stock [Member] | |||||||||||||
Schedule of Equity Method Investments [Line Items] | |||||||||||||
Shares Issued, Price Per Share | $ 3.40 | ||||||||||||
Subsequent Event [Member] | Restricted Stock [Member] | |||||||||||||
Schedule of Equity Method Investments [Line Items] | |||||||||||||
Stock issued (in shares) | 78,510 | ||||||||||||
Stock Issued During Period, Price Per Share | $ 3.19 | ||||||||||||
Stock Issued During Period, Value, New Issues | $ 250,447 | ||||||||||||
Common Stock [Member] | |||||||||||||
Schedule of Equity Method Investments [Line Items] | |||||||||||||
Stock issued (in shares) | 1,143,000 | ||||||||||||
Shares Issued, Price Per Share | $ 5.70 | ||||||||||||
August 2014 Warrants [Member] | |||||||||||||
Schedule of Equity Method Investments [Line Items] | |||||||||||||
Class of Warrant or Right, Number of Securities Called by Warrants or Rights | 571,500 | ||||||||||||
Class of Warrant or Right, Exercise Price of Warrants or Rights | $ 7.12 | ||||||||||||
Private Placement [Member] | Common Stock [Member] | |||||||||||||
Schedule of Equity Method Investments [Line Items] | |||||||||||||
Stock issued (in shares) | 140,053 | ||||||||||||
Proceeds from Issuance of Private Placement | $ 515,395 | ||||||||||||
Aspire Capital Fund LLC [Member] | |||||||||||||
Schedule of Equity Method Investments [Line Items] | |||||||||||||
Stock issued (in shares) | 417,000 | 417,000 | 207,182 | ||||||||||
Common Stock, Shares Subscribed but Unissued | 10,000,000 | ||||||||||||
Stock Issued During Period, Value, New Issues | $ 1,387,439 | $ 1,387,439 | $ 750,000 | ||||||||||
Common Stock To Be Issued For Commitment Fee | 154,189 | ||||||||||||
Maximum Common Stock To Be Issued Per Trading Day | 50,000 | ||||||||||||
Maximum Common Stock Value To Be Issued Per Trading Day | $ 500,000 | ||||||||||||
Maximum Percentage Of Common Stock Weighted Average Price | 30.00% | ||||||||||||
X Sspine [Member] | Subsequent Event [Member] | Restricted Stock [Member] | |||||||||||||
Schedule of Equity Method Investments [Line Items] | |||||||||||||
Stock issued (in shares) | 78,510 | ||||||||||||
Stock Issued During Period, Price Per Share | $ 3.19 | ||||||||||||
Stock Issued During Period, Value, New Issues | $ 250,447 | ||||||||||||
X Sspine [Member] | Common Stock [Member] | |||||||||||||
Schedule of Equity Method Investments [Line Items] | |||||||||||||
Stock issued (in shares) | 4,242,655 | ||||||||||||
Stock Issued During Period, Value, New Issues | $ 60,000,000 | ||||||||||||
Repayments of Debt | $ 13,000,000 |
Inventories (Details)
Inventories (Details) - USD ($) | Sep. 30, 2015 | Dec. 31, 2014 |
Current inventories | ||
Raw materials | $ 4,685,993 | $ 3,836,635 |
Work in process | 3,089,413 | 2,484,635 |
Finished goods | 17,639,292 | 5,163,458 |
Inventory, Gross | 25,414,698 | 11,484,728 |
Reserve for obsolescence | (3,372,190) | (1,926,080) |
Current inventories, total | 22,042,508 | 9,558,648 |
Non-current inventories | ||
Finished goods | 2,177,090 | 2,860,248 |
Reserve for obsolescence | (495,952) | (925,990) |
Non-current inventories, total | 1,681,138 | 1,934,258 |
Total inventories | $ 23,723,646 | $ 11,492,906 |
Impairment of Assets (Details T
Impairment of Assets (Details Textual) - USD ($) | 3 Months Ended | 9 Months Ended | 12 Months Ended | ||
Sep. 30, 2015 | Sep. 30, 2014 | Sep. 30, 2015 | Sep. 30, 2014 | Dec. 31, 2014 | |
Income Statement, Balance Sheet and Additional Disclosures by Disposal Groups, Including Discontinued Operations [Line Items] | |||||
Disposal Group, Including Discontinued Operation, Property, Plant and Equipment | $ 80,042 | ||||
Disposal Group, Including Discontinued Operation, Inventory | 832,507 | ||||
Disposal Group, Including Discontinued Operation, Assets | 0 | ||||
Asset Impairment Charges | $ 233,748 | $ 0 | $ 233,748 | $ 0 | $ 912,549 |
Payments to Acquire Businesses, Gross | 250,000 | ||||
Contingent Payment | 100,000 | ||||
Depreciation, Amortization and Accretion, Net, Total | $ 285,224 | ||||
Gain (Loss) on Sale of Assets and Asset Impairment Charges | $ 51,476 | ||||
Gross Profit [Member] | Minimum [Member] | |||||
Income Statement, Balance Sheet and Additional Disclosures by Disposal Groups, Including Discontinued Operations [Line Items] | |||||
Concentration Risk, Percentage | 1.00% | 1.00% | |||
Sales Revenue, Net [Member] | Minimum [Member] | |||||
Income Statement, Balance Sheet and Additional Disclosures by Disposal Groups, Including Discontinued Operations [Line Items] | |||||
Concentration Risk, Percentage | 1.00% | 1.00% |
Property and Equipment, Net (De
Property and Equipment, Net (Details) - USD ($) | Sep. 30, 2015 | Dec. 31, 2014 |
Property, Plant and Equipment [Line Items] | ||
Total cost | $ 17,125,732 | $ 9,527,785 |
Less: accumulated depreciation | (5,692,668) | (4,873,258) |
Property and equipment, net | 11,433,064 | 4,654,527 |
Building [Member] | ||
Property, Plant and Equipment [Line Items] | ||
Total cost | 1,657,579 | 1,657,579 |
Equipment [Member] | ||
Property, Plant and Equipment [Line Items] | ||
Total cost | 5,279,695 | 4,724,608 |
Computer equipment [Member] | ||
Property, Plant and Equipment [Line Items] | ||
Total cost | 364,966 | 225,009 |
Computer software[Member] | ||
Property, Plant and Equipment [Line Items] | ||
Total cost | 469,301 | 345,039 |
Furniture and fixtures [Member] | ||
Property, Plant and Equipment [Line Items] | ||
Total cost | 256,721 | 153,834 |
Leasehold Improvements [Member] | ||
Property, Plant and Equipment [Line Items] | ||
Total cost | 2,477,281 | 2,380,617 |
Vehicles [Member] | ||
Property, Plant and Equipment [Line Items] | ||
Total cost | 10,000 | 41,099 |
Surgical Instruments [Member] | ||
Property, Plant and Equipment [Line Items] | ||
Total cost | $ 6,610,189 | $ 0 |
Property and Equipment, Net (46
Property and Equipment, Net (Details Textual) - USD ($) | 9 Months Ended | |
Sep. 30, 2015 | Sep. 30, 2014 | |
Property, Plant and Equipment [Line Items] | ||
Capital Leased Assets, Gross | $ 461,036 | |
Capital Leases, Lessee Balance Sheet, Assets by Major Class, Accumulated Depreciation | 199,020 | |
Cost of Property Repairs and Maintenance | 272,811 | $ 233,547 |
Depreciation | $ 563,790 | $ 440,397 |
Intangible Assets (Details)
Intangible Assets (Details) - USD ($) | 9 Months Ended | 12 Months Ended |
Sep. 30, 2015 | Dec. 31, 2014 | |
Intellectual Property | ||
Gross carrying value | $ 43,691,182 | $ 1,036,580 |
Accumulated amortization | (1,467,326) | (381,090) |
Net carrying value | 42,223,856 | 655,490 |
Aggregate amortization expense: | $ 1,423,983 | $ 77,022 |
Intangible Assets (Details 1)
Intangible Assets (Details 1) | Sep. 30, 2015USD ($) |
Estimated amortization expense: | |
Remainder of 2015 | $ 2,050,466 |
2,016 | 4,465,216 |
2,017 | 4,625,114 |
2,018 | 4,640,027 |
2,019 | 4,531,176 |
Thereafter | 21,911,857 |
Total | $ 42,223,856 |
Accrued Liabilities (Details)
Accrued Liabilities (Details) - USD ($) | Sep. 30, 2015 | Dec. 31, 2014 |
Accrued Liabilities [Line Items] | ||
Accrued stock compensation | $ 91,741 | $ 0 |
Wages/commissions payable | 2,547,860 | 1,434,743 |
Accrued Integration Expense | 241,132 | 0 |
Other accrued expenses | 3,836,164 | 486,558 |
Accrued Liabilities Current | $ 6,716,897 | $ 1,921,301 |
Long-Term Debt (Details)
Long-Term Debt (Details) - USD ($) | Sep. 30, 2015 | Dec. 31, 2014 |
Debt Instrument [Line Items] | ||
Loan Payable | $ 112,354,646 | $ 26,025,814 |
Less: current portion | (53,172) | (50,671) |
Debt discount | 0 | (5,104,813) |
Long-term debt | 44,301,474 | 20,870,330 |
Ros Acquisition Offshore [Member] | ||
Debt Instrument [Line Items] | ||
Loan Payable | 42,000,000 | 24,000,000 |
Adjustment fee payable to ROS Acquisition Offshore, due in August 2019 | 0 | 700,000 |
Valley Bank Of Belgrade [Member] | ||
Debt Instrument [Line Items] | ||
Loan Payable | 1,287,146 | $ 1,325,814 |
Convertible Senior Unsecured Notes [Member] | ||
Debt Instrument [Line Items] | ||
Loan Payable | 68,000,000 | |
Payment in Kind (PIK) Note [Member] | ||
Debt Instrument [Line Items] | ||
Loan Payable | $ 1,067,500 |
Long-Term Debt (Details 1)
Long-Term Debt (Details 1) | Sep. 30, 2015USD ($) |
Schedule of maturities due on debt [Line Items] | |
Remainder of 2015 | $ 12,953 |
2,016 | 53,796 |
2,017 | 57,114 |
2,018 | 60,637 |
2,019 | 64,377 |
Thereafter | 112,105,769 |
Total | $ 112,354,646 |
Long-Term Debt (Details Textual
Long-Term Debt (Details Textual) - USD ($) | Aug. 10, 2015 | Mar. 06, 2014 | Jul. 31, 2015 | Sep. 30, 2015 | Sep. 30, 2014 | Mar. 31, 2014 | Sep. 30, 2015 | Sep. 30, 2014 |
Debt Instrument [Line Items] | ||||||||
Proceeds from Lines of Credit | $ 4,000,000 | |||||||
Debt Instrument, Face Amount | $ 65,000,000 | |||||||
Debt Instrument, Interest Rate During Period | 6.00% | |||||||
Business Acquisition, Percentage of Voting Interests Acquired | 100.00% | |||||||
Business Combination Conjunction Related Expenses | $ 4,800,000 | |||||||
Payments of Debt Issuance Costs | $ 2,200,000 | |||||||
Business Combination Expenses Related To Future Acquisition | $ 2,600,000 | $ 2,600,000 | ||||||
Debt Instrument, Maturity Date | Jul. 15, 2021 | |||||||
Gains (Losses) on Extinguishment of Debt, Total | $ 2,345,019 | $ 0 | 2,345,019 | $ 0 | ||||
New Facility [Member] | ||||||||
Debt Instrument [Line Items] | ||||||||
Line of Credit Facility, Current Borrowing Capacity | $ 18,000,000 | |||||||
Line of Credit Facility, Expiration Date | Jul. 31, 2020 | |||||||
Gains (Losses) on Extinguishment of Debt, Total | $ 2,345,019 | |||||||
Convertible Notes Payable [Member] | ||||||||
Debt Instrument [Line Items] | ||||||||
Debt Instrument, Face Amount | $ 52,000,000 | |||||||
Debt Instrument, Interest Rate During Period | 6.00% | |||||||
Debt Instrument Purchase Of Additional Notes | $ 3,000,000 | |||||||
Conversion of Stock, Shares Converted | 257.5163 | |||||||
Conversion of Stock, Amount Converted | $ 1,000 | |||||||
Debt Instrument, Convertible, Conversion Price | $ 3.88 | |||||||
Term Loan [Member] | ||||||||
Debt Instrument [Line Items] | ||||||||
Line of Credit Facility, Current Borrowing Capacity | $ 24,000,000 | |||||||
Valley Bank Of Belgrade [Member] | ||||||||
Debt Instrument [Line Items] | ||||||||
Debt Instrument, Interest Rate, Effective Percentage | 6.00% | 6.00% | ||||||
Debt Instrument, Periodic Payment | $ 10,746 | |||||||
Debt Instrument, Maturity Date, Description | December 24, 2030 | |||||||
Ros Acquisition Offshore [Member] | ||||||||
Debt Instrument [Line Items] | ||||||||
Debt Conversion, Converted Instrument, Shares Issued | 150,000 | |||||||
Proceeds from Lines of Credit | $ 4,000,000 |
Stock-Based Compensation (Detai
Stock-Based Compensation (Details) | 9 Months Ended | |
Sep. 30, 2015 | Sep. 30, 2014 | |
Risk-free interest rate | 1.30% | 1.81% |
Expected volatility | 75.00% | 58.00% |
Expected term | 6 years | 5 years 3 months |
Expected forfeiture rate | 20.00% | 20.00% |
Dividend yield | 0.00% | 0.00% |
Stock-Based Compensation (Det54
Stock-Based Compensation (Details 1) - Stock Option - $ / shares | 9 Months Ended | |
Sep. 30, 2015 | Sep. 30, 2014 | |
Schedule of activity under stock option plans [Line Items] | ||
Outstanding at January 1, 2015, Shares | 695,336 | 758,328 |
Granted, Shares | 45,000 | 169,200 |
Exercised, Shares | 0 | (6,666) |
Cancelled or expired, Shares | (31,604) | (147,396) |
Outstanding at June 30, 2015, Shares | 708,732 | 773,466 |
Exercisable at June 30, 2015, Shares | 388,498 | 297,962 |
Outstanding at January 1, 2015, Weighted Average Exercise Price | $ 11.09 | $ 14.90 |
Granted, Weighted Average Exercise Price | 4 | 5.78 |
Exercised, Weighted Average Exercise Price | 0 | 10 |
Cancelled or expired, Weighted Average Exercise Price | 12.71 | 19.95 |
Outstanding at June 30, 2015, Weighted Average Exercise Price | 10.54 | 11.99 |
Exercisable at June 30, 2015, Weighted Average Exercise Price | 13.53 | 17.03 |
Outstanding at January 1, 2015, Weighted Average Fair Value At Grant Date | 5.35 | 8.60 |
Granted, Weighted Average Fair Value At Grant Date | 2.81 | 5 |
Exercised, Weighted Average Fair Value At Grant Date | 0 | 0.04 |
Cancelled or expired, Weighted Average Fair Value At Grant Date | 6.02 | 9.20 |
Outstanding at June 30, 2015, Weighted Average Fair Value At Grant Date | 5.29 | 7.10 |
Exercisable at June 30, 2015, Weighted Average Fair Value At Grant Date | $ 6.43 | $ 6.50 |
Stock-Based Compensation (Det55
Stock-Based Compensation (Details Textual) - USD ($) | Oct. 08, 2015 | Nov. 10, 2014 | Jul. 31, 2015 | Jul. 31, 2014 | Aug. 31, 2013 | Mar. 31, 2014 | Sep. 30, 2015 | Sep. 30, 2014 |
Share-based Compensation, Shares Authorized under Stock Option Plans, Exercise Price Range [Line Items] | ||||||||
Shares authorized under the Plan | 1,400,000 | |||||||
Aggregate intrinsic value of options outstanding | 480,000 | |||||||
Allocated Share-based Compensation Expense | $ 479,289 | $ 938,785 | ||||||
Stock Issued During Period, Shares, New Issues | 150,000 | |||||||
Chief Executive Officer [Member] | ||||||||
Share-based Compensation, Shares Authorized under Stock Option Plans, Exercise Price Range [Line Items] | ||||||||
Options granted | 200,000 | |||||||
President [Member] | ||||||||
Share-based Compensation, Shares Authorized under Stock Option Plans, Exercise Price Range [Line Items] | ||||||||
Options granted | 55,000 | |||||||
Employee Stock Option [Member] | ||||||||
Share-based Compensation, Shares Authorized under Stock Option Plans, Exercise Price Range [Line Items] | ||||||||
Share-based Compensation Arrangement by Share-based Payment Award, Options, Exercisable, Intrinsic Value | 26,000 | |||||||
Employee Service Share-based Compensation, Nonvested Awards, Total Compensation Cost Not yet Recognized, Stock Options | $ 320,234 | |||||||
Share-Based Compensation Arrangement By Share-Based Payment Award, Options, Exercisable, Weighted Average Exercise Price | $ 3.90 | |||||||
Employee Service Share-based Compensation, Tax Benefit from Compensation Expense | $ 799,901 | |||||||
Restricted Stock [Member] | ||||||||
Share-based Compensation, Shares Authorized under Stock Option Plans, Exercise Price Range [Line Items] | ||||||||
Allocated Share-based Compensation Expense | 190,869 | $ 81,924 | ||||||
Share-Based Compensation Arrangement By Share-Based Payment Award, Equity Instruments Other Than Options, Grants In Period | 39,312 | |||||||
Employee Service Share-based Compensation, Nonvested Awards, Compensation Not yet Recognized, Share-based Awards Other than Options | $ 160,000 | $ 200,000 | 41,741 | |||||
Share Based Compensation Arrangement By Share Based Payment Award Equity Instruments Other Than Options Issue Price On Grand Date | $ 4.07 | |||||||
Stock Issued During Period, Shares, Restricted Stock Award, Net of Forfeitures, Total | 58,820 | |||||||
Shares Issued, Price Per Share | $ 3.40 | |||||||
Restricted Stock [Member] | General and Administrative Expense [Member] | ||||||||
Share-based Compensation, Shares Authorized under Stock Option Plans, Exercise Price Range [Line Items] | ||||||||
Employee Service Share-based Compensation, Nonvested Awards, Compensation Not yet Recognized, Share-based Awards Other than Options | $ 50,000 | |||||||
Restricted Stock [Member] | Subsequent Event [Member] | ||||||||
Share-based Compensation, Shares Authorized under Stock Option Plans, Exercise Price Range [Line Items] | ||||||||
Stock Issued During Period, Value, New Issues | $ 250,447 | |||||||
Stock Issued During Period, Shares, New Issues | 78,510 | |||||||
Stock Issued During Period, Price Per Share | $ 3.19 |
Warrants (Details)
Warrants (Details) - $ / shares | 9 Months Ended | 12 Months Ended |
Sep. 30, 2015 | Dec. 31, 2014 | |
Warrant activity [Line Items] | ||
Outstanding | 1,655,320 | 1,087,820 |
Issued, Shares | 0 | 571,500 |
Expired, Shares | (467,799) | (4,000) |
Outstanding | 1,187,521 | 1,655,320 |
Outstanding Weighted Average Exercise Price | $ 13.06 | $ 16.2 |
Issued, Weighted Average Exercise Price | 0 | 7.12 |
Expired, Weighted Average Exercise Price | 22.55 | 20 |
Outstanding Weighted Average Exercise Price | $ 9.32 | $ 13.06 |
Warrants (Details 1)
Warrants (Details 1) - Warrant [Member] - $ / shares | 9 Months Ended | |
Sep. 30, 2015 | Sep. 30, 2014 | |
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | ||
Value of underlying common stock (per share) | $ 3.26 | $ 4.48 |
Risk free interest rate | 1.37% | 1.81% |
Expected term | 4 years 3 months | 5 years 3 months |
Volatility | 75.00% | 58.00% |
Dividend yield | 0.00% | 0.00% |
Warrants (Details 2)
Warrants (Details 2) - shares | 9 Months Ended | 12 Months Ended | |
Sep. 30, 2015 | Sep. 30, 2014 | Dec. 31, 2014 | |
Class of Warrant or Right [Line Items] | |||
Outstanding | 1,655,320 | 1,087,820 | 1,087,820 |
Derivative warrants issued | 0 | 571,500 | |
Outstanding | 1,187,521 | 1,655,320 | |
Warrant [Member] | |||
Class of Warrant or Right [Line Items] | |||
Outstanding | 1,171,692 | 600,192 | 600,192 |
Derivative warrants issued | 0 | 571,500 | |
Derivative warrants exercised | 0 | 0 | |
Outstanding | 1,171,692 | 1,171,692 | 1,171,692 |
Warrants (Details Textual)
Warrants (Details Textual) | 9 Months Ended |
Sep. 30, 2015USD ($) | |
Class of Warrant or Right [Line Items] | |
Unrealized Loss On Warranty Derivative Liability | $ 78,923 |
Commitments and Contingencies60
Commitments and Contingencies (Details) | Sep. 30, 2015USD ($) |
Schedule of future minimum payments by operating lease [Line Items] | |
Remainder of 2015 | $ 175,055 |
2,016 | 609,317 |
2,017 | 280,527 |
2,018 | 286,754 |
2,019 | 166,940 |
Thereafter | 559,000 |
Total | $ 2,077,593 |
Commitments and Contingencies61
Commitments and Contingencies (Details Textual) - USD ($) | 9 Months Ended | |
Sep. 30, 2015 | Sep. 30, 2014 | |
Schedule of commitment and contingencies [Line Items] | ||
Operating Leases, Rent Expense, Net | $ 484,064 | $ 245,884 |
Supplemental Disclosure of Ca62
Supplemental Disclosure of Cash Flow Information (Details) - USD ($) | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2015 | Sep. 30, 2014 | Sep. 30, 2015 | Sep. 30, 2014 | |
Cash paid during the period for: | ||||
Interest | $ 2,372,453 | $ 2,379,439 | ||
Non-cash activities: | ||||
Issuance of shares related to debt issuance | 0 | 1,094,999 | ||
Issuance of capital leases | 70,020 | 0 | ||
Issuance of share for non-cash consulting expense | $ 50,000 | $ 39,697 | 190,869 | 81,924 |
Issuance of restricted stock to employees | 41,741 | 142,601 | ||
Issuance of shares in conjunction with the acquisition of X-spine | $ 14,934,146 | $ 0 |
Related Party Transactions (Det
Related Party Transactions (Details Textual) - USD ($) | 9 Months Ended | |
Sep. 30, 2015 | Sep. 30, 2014 | |
Chief Operating Officer [Member] | ||
Related Party Transaction [Line Items] | ||
Amount of related party transaction | $ 5,000 | |
American Donor Services [Member] | ||
Related Party Transaction [Line Items] | ||
Amount of related party transaction | 1,367,487 | $ 1,900,952 |
Xspine [Member] | ||
Related Party Transaction [Line Items] | ||
Amount of related party transaction | $ 337,000 |